Walker Morris Insight – When is an Investment Scheme a CIS?

Andrew Northage, Partner at Walker Morris LLP, speaks to Sturgeon Ventures on “When is an Investment Scheme a CIS?”
Establishing or operating a collective investment scheme (CIS) is a regulated activity under section 19 of the Financial Services and Markets Act 2000 (FSMA). As such, a person establishing or operating a CIS must be appropriately authorised.

Breach of section 19 is a criminal offence and the person concerned may be required to disgorge profits or compensate investors. There are also significant restrictions on how interests in a CIS may be lawfully marketed. It is therefore important for those establishing or operating investment schemes to have a clear understanding of whether the scheme in question is a CIS. The investors too will want to know whether the regulatory protection afforded to investments in CISs will apply to their investment.
Section 235(1) of FSMA states that CIS “means any arrangements with respect to property of any description, including money, the purpose or effect of which is to enable persons taking part in the arrangements (whether by becoming owners of the property or any part of it or otherwise) to participate in or receive profits or income arising from the acquisition, holding, management or disposal of the property or sums paid out of such profits or income……”To read more, please download the pdf below:

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